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United Kingdom

Yianni v Paliouras: Bankruptcy petitions can proceed despite standard Breathing Space; court’s discretion at large; anger alone not abuse of process (England and Wales)

Published on: 14 June 2024

Published by a LexisNexis Restructuring & Insolvency expert
Legal News
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Article summary

What are the practical implications of this case?

In a standard, rather than mental health, breathing space moratorium, a creditor will generally find it simpler to persuade the court to continue with a bankruptcy petition already on foot than to secure permission to present a fresh petition, because, in the former scenario, the court’s discretion is not constrained by the limitations imposed by the breathing space legislation, whereas seeking to present during the moratorium engages those constraints. Moreover, in applying those statutory limits, where the debtor has had ample time to obtain advice, explore alternative solutions, and prepare adequately for a hearing, allowing the petition to proceed will not be viewed as causing the debtor any detriment. A petition will also not constitute an abuse of process for an extraneous purpose merely because a creditor is angry or vengeful; rather, there must be evidence showing that the petition was brought with the intention of harming the debtor, as opposed to legitimately setting the bankruptcy process in motion. Accordingly, continuation is the more attainable course.

What was the background?

Bankruptcy petitions had been presented against four debtors in respect of a loan...

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